The Global Slowdown Is Making Asia's Debt Mountain Even Worse

People's Liberation Army soldiers perform during a rehearsal of a musical drama titled "The Road of Revival" in 2009.REUTERS/Kevin Zhao

Morgan Stanley just came out with a fresh chartbook looking through Asia's debt situation again. It's safe to say that it's still looking grim.

While all eyes are on Europe, falling inflation (and the threat of full-blown deflation) are major hazards in Asia, too. When economies grow more slowly, if they can't slow their debt accumulation down by the same pace, those liabilities get bigger and bigger in comparison to GDP. Paired with rocketing corporate debt, it looks very ugly.